Financial service providers must think about their customers not just as users of their products and services, but as individuals whose behavior, and ultimately financial well-being, can be shaped by each interaction. If you’re thinking this sounds like simply passing the financial capability-building onus onto providers, hang tight.

Building successful financial capability requires moving beyond traditional modes of product delivery and financial education. In fact, it insists on marrying the two. Not only are providers optimally positioned to strengthen clients’ capability, they stand to benefit the most from capable clients. Financially capable clients are clients that are financially healthy and equipped to regularly use their products and services. Financial capability boosts the business case for serving the base of the pyramid. In our paper A Change in Behavior: Innovations in Financial Capability, the best examples from a global survey of financial capability innovations were those that figured out how to embed important information like money management within the fabric of products and services.

This can be daunting because it requires retooling how business is done. Most critically, building financial capability asks providers to rethink the customer experience. Providers must move past the assumption that customers need their services more than they need the customer (an attitude that surfaced during the very early stages of microcredit). Customer loyalty, trust, and retention are as important as the bottom line and indeed contribute to the bottom line. A number of theories and practices, such as human centered design, behavioral economics, and customer centricity, which have recently grown in popularity, embody this idea. They ask us to redirect our attention away from how a product is being delivered to who is being targeted.

In our project we were excited to see the broad array of examples of organizations taking on this challenge and we remain hopeful that many more will begin to experiment in the near term. Several practices and lessons emerged from such organizations that habitually learn from their clients’ needs and behaviors, and tailor their products to meet those specific needs and build capability. The research for this paper gave me a chance to talk with financial service providers of many types, especially in India. Below are a few of the lessons from this process that I think are particularly important:

Organizations that listen to their customers are the future. Of course, not one organization would admit to not listening to their clients. But I’m not referring to a periodic survey or occasional field visits. Those are important, but they are not enough. Providers that actively put themselves in their customer’s shoes, that try to see the world through their customers’ eyes, had the best sense of both their clients’ needs and how to meet them. To change how clients are served, providers must develop a sustainable feedback loop into which customer information is incorporated into the customer experience.

How the data is used is critical. For many organizations, the next steps after listening to customers can be confusing. I’ve gathered the feedback – now what? It’s critical to find an efficient method of both gathering customer data and transforming it into action. Throughout the paper, I found a variety of methods of analysis, from high touch, real time analysis to low touch, longer-term examination. While there is no one way to do it, one thing these methods all had in common was the flexibility to react to client insights. I might also call it humility. With clients’ lives being so complex and changeable, product flexibility is important.

Teachable moments. I know you’re not supposed to play favorites, but the teachable moments concept is my favorite of the practices highlighted in our paper. It’s so simple! Take every client interaction as an opportunity to teach – whether it is discussing a new product, a new way to use the current product, or a concept like risk management or interest rates. Client interactions also present an opportunity to simply check in with them. These interactions benefit both parties – the provider passes along information to the client and possibly learns from the client while the client learns something new and feels like the provider is on their side.

Just because it can be expensive doesn’t mean it’s not important. High touch interventions – like personalized financial plans and customized goal setting – require a lot of effort. Agent training, extended time spent with customers, and follow-up meetings all mean money and effort on behalf of the provider. However, that does not mean that we should cut out these kinds of services. Given that it is not unusual for low-income people, especially women, to be inexperienced with mobile phones and have higher rates of illiteracy and innumeracy, these kinds of high touch interactions need to remain for the foreseeable future. And, as our project detailed, there are many less expensive low-touch alternatives to build clients’ capability. In the case where clients are mobile phone users, Juntos, for example, is an SMS-based service that uses reminders and nudges informed by a customer’s behavior to encourage clients to save and become active users of banking services.

As stated in the paper, successful financial inclusion requires financially capable consumers who use products actively for their own benefit. After a year of investigation for the project, I am excited about the level of innovation and enthusiasm surrounding this work. The innovations outlined in our paper span a wide array of vital services for low-income people demonstrating the myriad ways to reach low-income people to improve their financial health and well-being. I hope the paper shows that while there is no right way to address this challenge, providers, and all other stakeholders, play a key role in making this change happen. I look forward to the next generation of innovations and to seeing how future financial capability interventions help customers solve problems, get things done, and reach their goals.

Founding Sponsor

Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.